File sharing not the only reason CD sales are falling

German blogger Robert Gehring recently published a fascinating piece analyzing the reasons CD sales have been declining in the US. Gehring took a closer look at the US sales numbers published by the RIAA for the years 1990 to 2007 to figure out what exactly causes the current crisis. His conclusion?
"The market for physical audio recordings has been significantly impacted by the specific features of CDs."

In other words: Don't blame file sharing networks for effects that are caused by the CD format itself. Gehring believes that the initial boom of audio CDs was primarily caused by the fact that people wanted to convert their entire music collection to the new, digital format, and as a result even bought legacy albums that they already owned on vinyl or tape. Gehring calls this the growth phase of the CD, which approximately lasted from 1991 to 1994.

(used with permission)

After that, the market went through a phase of consolidation, which approximately lasted from '94 to 2000, according to Gehring. There's not much more growth during that phase, and sales of recorded music are more or less stable, averaging around a billion recordings per year. The CD has gained a market share of 90 percent at this time, and most consumers are starting to have substantial CD collections.

Of course, those CD collections are all digital, perfect copies. People may not copy or rip CDs that much during the 90ies, but that doesn't mean that they don't trade or sell them, opening up a whole new secondary market.

Sure, there's always been second hand record stores, but vinyl recordings were scratching, and only hardcore collectors were willing to wade through huge bins of used vinyl to find what they wanted. The sound quality of CDs on the other hand didn't deteriorate as much, so it was easier to resell the ones you didn't like.

Add Ebay to the mix, and you'll end up with a huge secondary market that eats away shares of traditional music sales. And that's what exactly what happened after 2000, Gehring believes. Here's a quote from his article:

"Up until 2007 a total of 12 billion CDs have been sold (in the US). It's safe to assume that at least 10 billion if these CDs still exist, even if you consider a certain degree of wear and tear. A substantial number of these CDs is part of the secondary market."

(used with permission)

I think that's a very interesting perspective, especially if you consider that traditionally, most of the best-selling albums that get the RIAA's gold and platinum awards have been legacy titles, meaning that classics from the Rolling Stones and the Beatles have been huge money makers for the industry for the years. of course, those are the very albums that are also big on the secondary market. You simply don't get as many used 2009 CDs on Ebay.

Does that mean that file sharing has no impact at all on record sales? I doubt it. Napster and its predecessors have taught a whole generation to consumer their music via their PC and mobile players. Those folks don't really care for physical sound recordings, be it used or new. However, the fact that an older audience that may not be as much int file sharing also has access to cheap music through this secondary market has definitely worsened the crisis the music industry is facing.